SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X| Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential. For Use of the
Commission Only (as permitted by Rule
|X| Definitive Proxy Statement 14a-6(e)(2)
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CELERITY SOLUTIONS, INC.
(Name of Registrant as Specified in Its Charter
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE>
[LOGO]
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
September 10, 1999
To the Stockholders of
Celerity Solutions, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of Celerity
Solutions, Inc. ("the Company") will be held at the Company's corporate offices
at 270 Bridge Street, Dedham, Massachusetts, 01742 on Friday, September 10, 1999
at 10:00 a.m. for the following purposes:
1. To elect five directors to hold office until the later of the next Annual
Meeting of Stockholders and the election and qualification of their
successors or their earlier resignation or removal.
2. To ratify and approve an Amendment to the Company's Amended and Restated
1992 Non-Qualified Stock Option Plan for Non-Employee Directors increasing
the compensation for Director's serving as Chairmen of the Compensation and
Audit Committees on the Company's Board of Directors, from a stock option
to purchase 20,000 shares of the Company's Common to a stock option to
purchase 30,000 shares of the Company's Common Stock.
3. To ratify and approve the selection of Ernst & Young LLP as the Company's
auditors for Fiscal 2000.
4. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on June 30, 1999 are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
By Order of the Board of Directors,
/s/ Edward B. Merino
-----------------------------------
Edward B. Merino
Secretary
Dedham, Massachusetts
July 28, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
CELERITY SOLUTIONS, INC.
PROXY STATEMENT
GENERAL
This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Celerity Solutions, Inc. for use at the Annual Meeting
of Stockholders of the Company to be held at 10:00 a.m. on Friday, September 10,
1999, and any adjournments thereof. Copies of this statement and form of proxy
are expected to be first provided to stockholders on or about July 28, 1999. The
Company's 1999 Annual Report to Stockholders will be mailed concurrently with
the proxy material.
RECORD DATE AND OUTSTANDING SHARES
Only stockholders of record at the close of business on June 30, 1999 ("the
Record Date") will be entitled to notice of and to vote at the Meeting. On the
Record Date there were 8,017,798 shares of the Company's Common Stock, $.10 par
value per share, outstanding. Each share of Common Stock outstanding is entitled
to one vote on all matters. There is no other class of voting securities
outstanding.
QUORUM AND VOTING OF SHARES
The presence at the Meeting, in person or by proxy, of holders of at least a
majority of the shares entitled to vote at the Meeting shall constitute a quorum
for the purpose of conducting business. In the election of directors,
stockholders entitled to vote do not have cumulative voting rights. Abstentions
and broker non-votes are counted for the purpose of determining the presence or
absence of a quorum. The effect of abstentions and broker non-votes, except for
the election of directors will not be included in the vote for or against items
acted upon.
If the enclosed proxy is properly executed and returned prior to voting at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions given. In the absence of instructions, the shares will be voted in
accordance with the recommendations of the Board of Directors set forth herein.
The Board of Directors is not aware, as of the date hereof, of any matters to be
voted upon at the Meeting other than those stated in this Proxy Statement and
the accompanying Notice of 1999 Annual Meeting of Stockholders. If, however, any
other matters are properly presented at the Meeting or any adjournments thereof,
it is the intention of the persons named in the accompanying proxy to vote the
shares of Common Stock represented thereby in accordance with their best
judgment pursuant to discretionary authority granted in the proxy.
Any proxy submitted by a stockholder may be revoked at any time before it is
voted by giving written notice of revocation or delivering a duly executed proxy
bearing a later date to the Secretary at the corporate offices, or by attending
the Meeting and voting in person.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company may
also reimburse brokerage firms, and other persons representing beneficial owners
of shares, for their expenses in forwarding solicitation materials to such
beneficial owners. In addition, the Company's directors, officers and regular
employees, without receiving any additional compensation, may solicit proxies
personally or by telephone or facsimile.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the holdings
of the parties who were known, based on filings with the Securities and Exchange
Commission and the records of the Company's transfer agent as of July 13, 1999
to be the beneficial owners of more than 5% of the outstanding Common Stock of
the Company. The parties named below have sole voting power and sole investment
power with respect to the shares beneficially owned, except as noted below.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock
------------------------------------ -------------------- ------------
<S> <C> <C>
Luc Ringuette 1,211,459(1) 13.69%
22581 Sumerfield, Mission Viejo, CA 92692
Paul Carr 1,655,812(2) 18.26%
270 Bridge Street, Suite 300, Dedham, MA 02402
</TABLE>
(1) Acquired in connection with the Company's purchase of the stock of Somerset
Automation, Inc. (SAI) on December 8, 1997 (see "Transactions with
Beneficial Owners, Directors, and Executive Officers"). Includes 30,000
vested options to purchase Celerity common stock at $.62 per share. The
options were received as part of the Non-employee Director stock option
plan.
(2) Acquired in connection with the Company's purchase of the stock of Client
Server Technologies, Inc. (CSTI) on March 31, 1997 (see "Transactions with
Beneficial Owners, Directors, and Executive Officers"). In addition, in
conjunction with the acquisition of Client Server Technologies Inc., Mr.
Carr was granted an option to purchase 250,000 shares of common stock at
$1.00 per share pursuant to the 1991 Amended and Restated Non-Qualified
Employee Stock Option Plan. Also includes 750,000 shares of common stock
exchanged for $300,000 of past due debt (at a price of $.40 per share) on
July 13, 1999.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the holdings
of the Company beneficially owned by each director, nominee for director, and
executive officer, and by all directors and executive officers as a group as of
June 12, 1999. Each of the persons named has sole voting power and sole
investment power with respect to the shares beneficially owned, unless otherwise
indicated.
<TABLE>
<CAPTION>
Percent of
Name of Amount and Nature of Common
Beneficial Owner Beneficial Ownership Stock
---------------- -------------------- -----
<S> <C> <C>
Luc Ringuette 1,211,459(1) 13.69%
Paul Carr 1,655,812(2) 18.26%
Richard J. Santagati 45,000(3) .51%
Harold H. Leach Jr. 20,000(4) .23%
Edward B. Merino 29,653(5) .34%
========= =====
All Directors & Executive Officers as a Group (5 persons) 2,961,924 32.26%
</TABLE>
(1) Acquired in connection with the Company's acquisition of SAI on December 8,
1997. (See "Transactions with Beneficial Owners, Directors, and Executive
Offices). Also includes options granted to purchase 30,000 shares of Common
Stock at $.62 per share pursuant to the Company's Non-Qualified Stock
Option Plan for Non-Employee Directors.
(2) Acquired in connection with the Company's acquisition of CSTI on March 31,
1997. (See "Transactions with Beneficial Owners, Directors, and Executive
Offices). In addition, in conjunction with the acquisition of Client Server
Technologies Inc., Mr. Carr was granted an option to purchase 250,000
shares of common stock at $1.00 per share pursuant to the 1991 Amended and
Restated Non-Qualified Employee Stock Option Plan. Also includes 750,000
shares of common stock exchanged for $300,000 of past due debt (at a price
of $.40 per share) on July 13, 1999.
(3) Includes options granted to purchase 15,000 and 30,000 shares of Common
Stock pursuant the Company's Non-Qualified Stock Option Plan for
Non-Employee Directors.
(4) Includes options granted to purchase 20,000 shares of Common Stock pursuant
to the Company's Non-Qualified Stock Option Plan for Non-Employee
Directors.
(5) Includes options granted to purchase 20,000 shares of Common Stock pursuant
to the Company's Non-Qualified Stock Option Plan for Non-Employee
Directors. Also includes 9,653 acquired in conjunction with the acquisition
of Somerset Automation Inc.
3
<PAGE>
PROPOSAL ONE: ELECTION OF DIRECTORS
IDENTIFICATION OF NOMINEES
The Board of Directors has nominated five directors to serve until the 1999
Annual Meeting of Stockholders and until their successors have been elected and
qualified, or until their earlier resignation or removal from office.
The nominees for election as directors are as follows:
<TABLE>
<CAPTION>
Name Position Age Director Since
---- -------- --- --------------
<S> <C> <C> <C>
Paul Carr Director, Chief Executive Officer and President 47 1999
Luc Ringuette Director 42 1999
Richard J. Santagati Director 54 1997
Edward B. Merino Director 57 1999
Harold H. Leach, Jr. Director 44 1999
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS STOCKHOLDERS VOTE "FOR" THE NOMINEES TO THE
BOARD OF DIRECTORS.
The Board of Directors has nominated five directors for election. Under the
bylaws of the Company, the Board of Directors is entitled to fill, until the
next Annual Meeting of Stockholders, any vacancy existing on the Board following
the Annual Meeting of Stockholders.
A plurality of the votes cast at the Annual Meeting in person or by proxy shall
elect said nominees as directors of the Company. The Company is not aware of any
reason why any of the nominees, if elected, would be unable to serve as a
director.
PRINCIPAL OCCUPATIONS AND DIRECTORSHIPS HELD BY NOMINEES
Paul Carr rejoined the Company as President in March of 1999. Mr. Carr served as
Executive Vice President of Business Development for Celerity from October of
1997 through September of 1998 when he left the Company to pursue other
interests. Prior to joining Celerity, Mr. Carr was founder and President of CSTI
a company acquired by Celerity in April of 1997. Mr. Carr started CSTI in
January of 1992. From 1989 through 1992 Mr. Carr was President of the Logistics
Products Division of Ross Systems. Prior to joining Ross Mr. Carr was President
of Cardinal Data Corp, a company acquired by Ross Systems in 1989. Mr. Carr has
18 years experience developing and managing companies offering supply chain
application software products. Mr. Carr is a graduate of Saint Michael's College
and has a Masters degree in business administration from the University of
Virginia's Colgate Darden school.
Luc Ringuette joined the Company as Chairman in March of 1999. Mr. Ringuette is
currently the Chief Executive Officer of Hot Status Enterprises (HSE). HSE
develops and markets internet and supply chain related software applications.
HSE is currently offering Celerity's warehouse management products to its
customers under the terms of a recently executed license agreement with the
Company. This agreement was filed as an exhibit to the Company's 1999 Form 10K.
Mr. Ringuette has over 15 years experience developing and implementing
warehousing solutions for large manufacturers and distributors. He holds a
Masters of Science Degree in Systems Management from USC and a Bachelor of
Science Degree in Computer Information Systems from California State Polytechnic
University in Pomona.
Richard J. Santagati is currently the President of Merrimack College, located in
North Andover, Massachusetts. He has held this position since June 1995 and was
acting President from March 1994. Prior to his position at Merrimack College,
Mr. Santagati was Chairman and Chief Executive Officer of Artel Communications
Corporation, a high technology company where he was responsible for growing
revenues significantly over a period of three years prior to its merger with
Chipcom Corporation. Prior to his position at Artel, he was a partner at
Lighthouse Capital Management, Inc., an investment management firm, and was the
Chief Executive Officer at Gaston & Snow, a
4
<PAGE>
national law firm. Mr. Santagati has also held several senior executive
positions at NYNEX, including President and Chairman of NYNEX Business
Information Systems and Vice President of Marketing for NYNEX Corporation. He is
currently a Director on the Corporate Boards of Computer Telephone Corporation
and ESP, Inc. Mr. Santagati holds a Bachelor's Degree from Merrimack College and
a Master's Degree from MIT's Sloan School of Management.
Harold H. Leach, Jr. is a co-founder of Legal Computer Solutions, Inc. ("LCS").
LCS is an Internet software products company. He is also a director of Sapiens
International Corporation, N.V., (NASDAQ: SPNS), a developer of mainframe
database tools. Previously, Mr. Leach was partner of the Boston law firm of
Choate, Hall & Stewart. Mr. Leach received law degrees from Harvard in
Cambridge, MA, and Cambridge University in Cambridge, England. In addition to
his legal education, Mr. Leach is well versed in Internet development
technologies.
Edward B. Merino is founder of Office of the Chairman Inc., a provider of
corporate governance services. He is also on the board of the Forum for
Corporate Directors in Orange County, CA. Additionally, he has served as an
advisor to numerous technology companies, including SofTEK, Affinity Media, and
Concentric - an Internet service provider. For the past six years, he was
director of corporate governance at Deloitte & Touche LLP. Previously, Mr.
Merino was CEO and Chairman of Hess, Greiner, and Polland. Mr. Merino attended
the Harvard Business school's "Making Corporate Boards More Effective" and the
Stanford Director's College, a series of corporate governance programs presented
by Stanford University Law School in conjunction with the SEC, the New York
Stock Exchange and Nasdaq.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 7 meetings during fiscal 1999. Each incumbent
director attended 100% of the aggregate of all meetings of the Board of
Directors, except one Board Meeting where one director was not present. The
standing committees of the Board of Directors are the Compensation Committee,
the Audit Committee and the Nominating Committee.
Compensation Committee. The Compensation Committee determines the compensation
of the President and Chief Executive Officer and administers the Company's
Non-Qualified Employee Stock Option Plan. The Committee's current members are
non-employee directors Luc Ringuette (Chairman), Richard J. Santagati, and
Harold H. Leach, Jr. and Edward B Merino.
Audit Committee. The Audit Committee recommends the appointment of the Company's
independent accountants and reviews and approves the results, findings, and
recommendations of audits performed by the independent accountants. The
Committee also reviews matters relating to corporate practices, regulatory and
financial reporting, accounting procedures and policies, financial and
accounting internal controls, and transactions involving potential conflicts of
interest. The Committee's current members are Richard J. Santagati (Chairman),
Harold B. Leach, Jr. and Edward B. Merino.
Nominating Committee. The Nominating Committee recommends the nomination of the
Company's Board members for election by stockholders. The Committee defines
criteria for Board members, identifies and evaluates prospective members and
makes recommendations to the Board for ratification. The Committee's current
members are Richard J. Santagati (Chairman), Paul Carr and Luc Ringuette.
5
<PAGE>
TRANSACTIONS WITH BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE OFFICERS
Client Server Technologies, Inc.
On March 31, 1997, the Company acquired all of the outstanding stock of CSTI in
exchange for $1,250,881 in cash, the issuance of 1,200,000 unregistered shares
of the Company's common stock and the issuance of non-interest bearing
convertible, long-term notes totaling $1,945,000. Debt holders have the right to
convert a portion of the notes ($1 million) which comes due on December 31, 1998
into shares of common stock at a $3.00 per share conversion price.
Paul Carr, former President of CSTI and the Company's current CEO, President and
a Director, owned approximately 61% of the stock of CSTI. Sixteen (16) former
employees of CSTI owned the remaining 39%. As a consequence of the transaction,
Paul Carr was issued 735,812 shares of the Company's stock. In addition, Mr.
Carr holds approximately 80% of the promissory notes issued to CSTI
stockholders. Mr. Carr's notes are secured with certain assets of the Company.
Effective July 13, 1999, the Company entered into debt restructuring agreements
with Paul Carr, President, Chief Executive Officer and Director of the Company
The Company originally issued a convertible promissory note and security
agreement dated March 31, 1997 in the original principal amount of $1,613,177
(the "Carr Note") to Mr. Carr in connection with the purchase by the Company of
CSTI. In connection with the Company's debt restructuring agreement with Mr.
Carr, the principal balance of the Carr Note was reduced by $200,000 in exchange
for the license by the Company to Mr. Carr of a fully-paid perpetual license to
Mr. Carr of the Company's Supply Chain Planner software product. In connection
with the debt restructuring agreement, Mr. Carr also converted $300,000 of the
principal balance of the Carr Note to the Company's Common Stock at a conversion
price of $.40 per share. The Company engaged an independent investment banking
firm which determined that the conversion price of $.40 per share for the
Company's Common Stock was fair from a financial point of view. In connection
with the debt restructuring agreement, the Company and Mr. Carr also agreed that
the remaining principal balance of the Carr Note in the amount of $538,048 will
be paid in forty-two equal installments of principal, together with accrued
interest, at an annual rate of 8% per annum commencing July 15, 1999.
Somerset Automation, Inc.
On December 8, 1997, the Company acquired all of the outstanding stock of SAI
through a merger between SAI and Somerset Solutions, Inc., wholly owned
subsidiary of the Company for stock, debt securities, and cash valued at
$5,557,918. The purchase price was composed of 1,958,233 unregistered shares of
the Company's common stock valued at $2,313,848, long-term notes totaling
$747,907 and cash payments totaling $2,496,163.
Luc Ringuette, CEO of SAI, owned approximately 60% of the stock. Twenty-one (21)
current and former employees and investors owned the remaining 40%. As a
consequence of the transaction, Luc Ringuette was issued 1,181,459 unregistered
shares of the Company's common stock. In addition, Mr. Ringuette holds
approximately 60% of the long-term note. Repayment of the note begins in Fiscal
2000. Mr. Ringuette's note is secured with certain assets of the Company.
Effective July 13, 1999, the Company entered into debt restructuring agreements
with Luc Ringuette, the Company's Chairman of the Board of Directors. The
Company originally issued a non-negotiable promissory note and security
agreement dated December 8, 1997 in the original principal amount of $448,116
(the "Ringuette Note") to Mr. Ringuette in connection with the purchase of
Somerset by the Company. In connection with the debt restructuring agreement
between the Company and Mr. Ringuette, the principal balance of the Ringuette
Note was reduced by $200,000 in exchange for the grant of a perpetual license by
the Company to Mr. Ringuette's affiliate for the Company's WMS Client Server
Software, WMS Cobol Software and Transportation Cobol software products. The
License Agreement entered into between the Company and Mr. Ringuette's
affiliated entity also provides for the payment by the affiliated entity of
royalty payments to the Company equal to not less than $500,000, subject to
licensing fees actually received by the affiliated entity. The debt
restructuring agreement between the Company and Mr. Ringuette also provides that
the remaining principal balance of the Ringuette Note in the amount of
$239,959.71 will be paid in thirty-six (36) equal installments of principal,
together with accrued interest, at an annual rate of 8% per annum commencing
July 15, 1999.
6
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company with the Securities and Exchange Commission (SEC). Directors,
officers, and greater than ten percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
filed.
Based solely on a review of Section 16(a) reports, all fiscal year 1999 forms
were filed on a timely basis except for late filings of Form 5 by messrs. Luc
Ringuette and Richard J. Santagati each a director and Mr. Paul Carr a director
and Chief Executive Officer.
COMPENSATION OF DIRECTORS
Under the terms of the Company's Amended and Restated 1992 Non-Qualified Stock
Option Plan for Non-Employee Directors ("the Director Plan"), each non-employee
director is granted an option to purchase 20,000 shares of common stock upon
initial election to the Company's Board of Directors and on the date of each
subsequent annual meeting of stockholders at which the director is elected or
re-elected to serve on the Board of Directors. The purchase price per share of
Common Stock for options granted pursuant to the Director Plan is equal to the
market price as defined by the Director Plan of the Company's Common Stock on
the date of grant. Options granted under the plan are exercisable for a five
year period from the date of grant. The options are exercisable for the five
year period regardless of whether or not the non-employee director remains on
the Board during the option period. In the event the option holder dies before
fully exercising any portion of an option then exercisable, such holder's legal
representatives may exercise such option at any time within the six (6) month
period following his or her death.
EXECUTIVE OFFICERS
There are currently no executive officers of the Company other than Mr. Carr.
Mr. Carr is not a party to an employment agreement with the Company.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth compensation of the Company's executive officers
who earned greater than $100,000 during fiscal year 1999 ("Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options Compensation ($)
------------------ ---- ---------- --------- ------------- ------- ----------------
<S> <C> <C>
Luda Kopeikina 1999 174,260 -- -- -- --
Chief Executive Officer 1998 171,006 -- -- -- --
And President 1997 92,088(1) -- -- 320,000 --
Igor Razboff 1999 -- -- -- -- --
Former Chief Executive 1998 24,712 -- -- 50,000 120,000
Officer 1997 153,842 -- -- -- 2,413(2)
Paul Carr 1999 203,984(3)
Executive Vice President, 1998 180,363 -- -- -- --
Business Development 1997 -- -- -- 250,000 --
Edward Terino 1999 154,220
Chief Financial Officer, 1998 131,539 -- -- 15,000 --
Treasurer and Secretary 1997 35,000(4) -- -- 75,000 --
Paul Fluckiger 1999 124,038(5) -- -- -- --
President, CSTI 1998 -- -- -- -- --
1997 -- -- -- -- --
</TABLE>
- ----------
(1) Employment began September 19, 1996 and ended March 12, 1999.
(2) Includes $1,713 for company matching 401(k) contribution and $700 for life
insurance.
(3) Includes salary for the period April 1998 through Mr. Carr's termination in
September of 1998, plus payments under the terms of a consulting contract.
Mr. Carr received from October 1998 through March 1999.
(4) Employment began December 16, 1996 and ended April 2, 1999.
(5) Employment began May 26, 1998 and ended July 16, 1999.
8
<PAGE>
OPTIONS
The following table sets forth fiscal year 1999 option grants to Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of Total
Number of Securities Options Granted To
Underlying Employee During Exercise or
Name Options Granted Fiscal Year Base Price
---- --------------- ----------- ----------
<S> <C> <C> <C>
Luda Kopekina (1) 400,000 51.8% $2.469
Paul Fluckiger (2) 150,000 19.4% $2.500
Steven Aulds (3) 90,000 11.7% $1.50
</TABLE>
- ----------
(1) Options granted on June 18, 1998. Of these 320,000 options were canceled
with termination of employment on March 12, 1999. The remaining 80,000 were
vested on 6/18/98 and expired on 6/12/99.
(2) Options granted on May 26, 1998. Of these 30,000 vested on 11/26/98 and
30,000 vested on 5/25/99. The remaining 120,000 options were canceled with
termination of employment on 7/23/99. The vested options will expire if not
exercised by 10/23/99.
(3) Options granted on December 1, 1998. Of these 18,000 vested on 6/1/99. The
remaining 72,000 options were canceled with termination of employment on
7/16/99. The vested options will expire if not exercised by 10/16/99.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table sets forth as of March 31, 1999, unexercised options and
corresponding option values for Executive Officers:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Options In-The-Money Options
Shares Acquired Value At March 31, 1999 At March 31, 1999
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul Carr -- -- 250,000 0 $0 $0
</TABLE>
9
<PAGE>
PROPOSAL TWO: AMENDMENT TO THE AMENDED AND RESTATED 1992
NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Proposed Amendment
In June 1999, the Board of Directors adopted, subject to stockholder approval,
an amendment to the Director Plan that increases compensation for chairmen of
the compensation and audit committees from 20,000 to 30,000 options. This
increase recognizes the time and effort demanded by these positions.
An affirmative vote by the holders of a majority of shares present or
represented and entitled to vote at the 1999 Annual Meeting of Stockholders in
person or by proxy and voting thereon shall approve the Amendment to the
Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED 1992 NON-QUALIFIED STOCK OPTION PLANS FOR NON-EMPLOYEE
DIRECTORS.
General
The Amended and Restated 1992 Non-Qualified Stock Option Plan for Non-employee
Directors ("the Director Plan") was adopted by the Company's Board of Directors
on May 23, 1995 and approved by the Company's stockholders on September 7, 1995.
The description of the Director Plan set forth below is qualified in its
entirety by the terms and conditions of the Amended and Restated 1992
Non-Qualified Stock Option Plan for Non-Employee Directors.
The purpose of the Director Plan is to attract and retain highly qualified
non-employee directors by encouraging such directors of the Company to acquire a
proprietary stake in the Company and its future growth. There are 600,000 shares
of Common Stock authorized for issuance upon exercise of stock options granted
under the Director Plan. Should any options granted under the Director Plan not
be exercised, in whole or in part, in the time allowed for such exercise, the
shares of Stock relating to such lapsed options shall again be available for
issuance under the Director Plan.
Under the current terms of the Director Plan, each non-employee director is
granted an option to purchase 20,000 shares of Common Stock upon initial
election to the Company's Board and on the date of each subsequent annual
meeting of stockholders at which the director is elected or re-elected to serve
on the Board of Directors. The purchase price per share of stock under options
granted pursuant to the Director Plan is equal to the market price of the stock
as defined by the Plan on the date of grant. Each option granted under the
Director Plan fully vests as of the date of grant and are exercisable for a five
year period from the date of grant. Pursuant to Rule 16b-3(c)(1) however, no
option granted under the Director Plan may be exercised during the six month
period immediately following the date of grant. If a holder dies before fully
exercising any portion of an option then exercisable, such holder's legal
representatives may exercise such option, at any time within the six (6) month
period following his or her death. Subject to the terms and conditions, and
within the limitations of the Director Plan, the members of the Board of
Directors who are not eligible to participate in the Director Plan may modify,
extend or renew outstanding options granted under the Director Plan and accept
the surrender and cancellation of outstanding options (to the extent not
theretofore exercised) and authorize the granting of new options in substitution
therefor or options as amended.
In the event of any reorganization, merger, consolidation, acquisition,
separation, recapitalization, split-up, combination, exchange of shares or stock
dividend of the stock or shares convertible into the stock or similar corporate
action, the number and class of shares of stock available pursuant to the
Director Plan and any options granted pursuant to the Director Plan, together
with the option prices, shall be adjusted by appropriate modifications to the
Director Plan and in any options outstanding pursuant to the Director Plan.
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The Company's Board of Directors may at any time suspend or discontinue the
Director Plan, but no amendment shall be authorized without stockholder approval
which (i) materially increases the benefits accruing to participants under the
Director Plan; (ii) materially increases the number of securities which may be
issued under the Director Plan, except as otherwise provided for in the Director
Plan; or (iii) materially modifies the requirements as to eligibility for
participation in the Director Plan. The Director Plan shall terminate in
September 2005 unless it shall have been sooner terminated by reason of there
having been granted and fully exercised options covering the entire 600,000
shares of stock subject to the Director Plan. Upon such termination, no further
options may be granted under the Director Plan.
A complete copy of the Director Plan is available to stockholders upon written
request made to the Company.
Federal Income Tax Consequences
Optionee -- An optionee will not recognize any taxable income at the time a
non-qualified stock option is granted. However, upon exercise of such, the
optionee will include in income an amount equal to the difference between the
fair market value of the shares on the date of exercise and the amount paid for
the stock upon exercise of the option. This amount will be treated as ordinary
income by the optionee and will be subject to income tax withholding by the
Company. Upon resale of the shares by the optionee, any subsequent appreciation
or depreciation in the value of the shares will be treated as a capital gain or
loss.
Company -- The Company will be entitled to a deduction in connection with the
exercise of a non-qualified stock option to the extent that the optionee
recognizes ordinary income and the Company withholds federal income taxes.
PROPOSAL THREE: RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to shareholder ratification, the Board of Directors, upon recommendation
of the Audit Committee, has reappointed the firm of Ernst & young LLP, Certified
Public Accountants, to audit the Company's financial statements for the 2000
fiscal year. Ernst & Yong have audited the Company's fiscal year financial
statements since 1992.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so. They will also be available to respond to appropriate questions presented at
the meeting.
An affirmative vote by holders of a majority of shares present or represented
and entitled to vote at the Annual Meeting in person or by proxy and voting
thereon shall ratify the reappointment of Ernst & Young LLP as the Company's
independent accountants for the 2000 fiscal year. Ratification of independent
public accountants is not required to be submitted to a vote of the
shareholders. Should the shareholders not ratify this reappointment, the Audit
Committee of the Board of Directors will consider the appointment of other
independent accountants.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 Annual Meeting of
Stockholders must be received on or before March 16, 2000 to be considered for
inclusion in the Company's Proxy Statement and Form of Proxy relating to that
meeting. In addition, if the Company receives notice of a shareholder proposal
after April 29, 2000, the persons named as proxies in the proxy statement fro
the 2000 annual meeting will have discretionary voting authority to vote on such
proposal at the 2000 annual meeting. Proposals should be sent to Celerity
Solutions, Inc., Attention: Corporate Secretary, 270 Bridge Street, Suite 301,
Dedham, MA 01742.
By Order of the Board of Directors,
/s/ Edward B. Merino
- --------------------
Edward B. Merino
Secretary
Dedham, Massachusetts
July 28,1999
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Attachment A
Proxy Card
CELERITY Proxy Solicited on Behalf of the
SOLUTIONS PROXY Board of Directors
Annual Meeting of Stockholders The undersigned hereby (a) acknowledges
September 10, 1999 receipt of the Notice of Special Meeting
of Stockholders of Celerity Solutions,
Inc. ("Celerity Solutions") to be held
on September 10, 1999, dated July 29,
1999; (b) appoints Paul Carr or Edward
Merino, or either of them, as Proxies,
each with the power to appoint a
substitute, (c) authorizes the Proxies
to represent and vote, as designated
below, all the shares of Common Stock of
Celerity Solutions, held of record by
the undersigned on June 30, 1999, at
such special meeting and at any
adjournment(s) thereof; and (d) revokes
any proxies heretofore given.
1. Election of the following persons to serve as Directors of
Celerity Solutions, Inc. until the next annual meeting.
Luc Ringuette |_| FOR |_| AGAINST |_| ABSTAIN
Paul Carr |_| FOR |_| AGAINST |_| ABSTAIN
Harold Leach |_| FOR |_| AGAINST |_| ABSTAIN
Richard |_| FOR |_| AGAINST |_| ABSTAIN
Santagati
Edward B. |_| FOR |_| AGAINST |_| ABSTAIN
Merino
2. Approval of Amendment to Celerity Solutions, Inc.'s Amended and
Restated 1992 Non-Qualified Stock Option Plan for Non- Employee
Directors increasing the compensation for director services for
directors of the Compensation and Audit committees from 20,000
stock options to 30,000 stock options.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of Ernst & Young as Celerity Solutions, Inc.'s auditors
for Fiscal 2000.
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment(s) or postponement(s) thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED,
THIS PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION, THE ELECTION OF THE DIRECTORS AND, IN THE
DISCRETION OF THE PROXIES, ON ANY OTHER BUSINESS.
_____________________ IMPORTANT: Please date this proxy and sign exactly
as your name or names appear thereon. If
stock is held jointly, all holders must
execute this proxy. Executors,
administrators, trustees, guardians and
others signing in the representative
capacity, please so indicate when
signing.
DATED: _______________, 1999 Signature
- ----------------------------------------------
PLEASE SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY IN THE ACCOMPANYING POSTPAID ENVELOPE. Signature if held jointly
- ----------------------------------------------
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Attachment B
Non-employee Directors
THE AMENDED AND RESTATED 1992 NON-QUALIFIED STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The purpose of this Non-Qualified Stock Option Plan For Non-Employee
Directors (the "Plan") is to improve the ability of CELERITY
SOLUTIONS, INC. (the "Company") to attract and retain highly qualified
non-employee directors by encouraging such directors of the Company to
acquire a proprietary stake in the Company and its future growth. It
is the view of the Company that it may achieve this goal by granting
stock options under the Plan.
2. Option Shares
Three hundred thousand (600,000) shares of the Common Stock of the Company,
par value $.10 per share (the "Stock"), are hereby reserved for issuance
upon the exercise of the stock options granted under the Plan (the
"Options"). The Stock may be issued pursuant to such Options either from
the Company's authorized, but unissued, Stock or from the Company's issued
but not outstanding Stock (treasury stock). Should any Options granted
hereunder not be exercised in the time allowed for such exercise, the
shares of Stock relating to such lapsed Options shall be available for
issuance pursuant to Options subsequently granted under the Plan.
3. Eligibility
All non-employee directors of the Company shall be eligible to receive
Options under the Plan.
4. Terms and Conditions
(a) Grant of Options: Subject to the provisions of the Plan, each
non-employee director of the Company shall be granted an Option for
the purchase of shares of Stock on each Date of Grant (as such term is
defined in paragraph (c) below) occurring during such director's
tenure as a director of the Company.
(b) Option Agreement: Each Option shall be evidenced by a written
agreement between the Company and the non-employee director specifying
the number of shares of Stock that may be purchased by its exercise.
(c) Date of Grant: The date on which an Option is granted to a
non-employee director (the "Date of Grant") shall be: (1) the date of
each annual meeting of shareholders of the Company at which a director
is elected or re-elected to serve on the Board of Directors commencing
with the annual meeting of shareholders for the fiscal year ended
March 31, 1995, and (2) the date on which a director who is not also
an employee is first elected by the Board of Directors to fill a
vacancy on the Board of Directors.
(d) Number of Shares Granted: Each non-employee director shall receive an
Option to purchase 20,000 shares of Common Stock on each Date of Grant
during such director's service on the Board of Director's of the
Company. In addition, on the date of the annual meeting of
shareholders for the fiscal year ended March 31, 1995, each director
who is not also an employee of the Company and who has served as a
director of the Company for at least three years as of such date shall
be granted an Option to purchase 37,500 shares of Common Stock.
Non-employee directors who have served between two and three years as
of such date shall be granted an Option to purchase 25,000 shares of
Common Stock.
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(e) Exercise of Options: Each Option issued hereunder shall be fully
vested as of the Date of Grant and each Option shall be exercisable
for a five year period commencing on the Date of Grant; provided,
however, that no Option granted hereunder may be exercised during the
six month period immediately following the Date of Grant pursuant to
Rule 16b-3(c) (1).
(f) Modification or Substitution of Options: Subject to the terms and
conditions and within the limitations of the Plan, the members of the
Board of Directors of the Company who are not eligible to participate
in the Plan may modify, extend or renew outstanding Options granted
under the Plan and accept the surrender and cancellation of
outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor or
Options as amended.
(g) Amendment: No amendment to this Section 5 of the Plan may be made more
than once every six (6) months, other than to comport with changes in
the Internal Revenue Code of 1986, as amended (the "Code"), the
Employee Retirement Income Security Act, or the rules promulgated
thereunder.
5. Option Price
The purchase price per share of Stock placed under an Option pursuant to
this Plan (the "Option Price") shall be equal to the Market Price of the
stock on the Date of Grant. "Market Price" shall mean the average of the
last trade price of the Common Stock on all domestic exchanges on which the
Common Stock may at the time be listed or admitted to trading, or, if the
Common Stock, shall not be so listed or admitted to trading, the average of
the last trading price in the domestic over-the-counter market, in each
such case averaged over a period of 20 consecutive business days prior to
the day as of which Market Price is being determined; provided that if the
Common Stock is listed on any domestic exchange, the term "business days"
as used in this sentence shall mean business days on which such exchange is
open for trading. If the Common Stock is neither listed or admitted to
trading on any domestic exchange nor quoted in the domestic over-the
counter market, the Market Price shall mean the last trade price as
furnished by any dealer in securities dealing in the Common Stock.
6. Duration of Option
Each Option granted hereunder may be exercised only by the individual to
whom it is issued. An Option granted hereunder shall be effective upon the
Date of Grant, and shall be exercisable for a five year period (the "Option
Period") from the Date of Grant; provided, however, that no Option granted
hereunder may be exercised during the six month period immediately
following the Date of Grant pursuant to Rule 16b-3(c)(1). If such holder
dies before fully exercising any portion of an Option then exercisable,
such Option may be exercised by such holder's legal representative's,
heir(s) or devisee(s) at any time within the six (6) month period following
his or her death.
7. [Intentionally Deleted]
8. Termination of the Plan
This Plan shall terminate upon the close of business ten (10) years from
the Adoption Date unless it shall have been sooner terminated by reason of
there having been granted and fully exercised Options covering the entire
six hundred thousand (600,000) shares of Stock subject to this Plan. Upon
such termination, no further Options may be granted hereunder. If, after
termination of this Plan as provided above, there are outstanding Options
which have not been fully exercised, such Options shall remain in effect in
accordance with their terms and shall remain subject to the terms of this
Plan.
9. Exercise of Options
An Option granted pursuant to this Plan shall be exercisable at any time
within the Option Period, subject to the terms and conditions of such
Option. Exercise of any Option shall be made by the delivery, during the
period that such Option
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is exercisable, to the Company, in person or by mail, of (i) written notice
from the Optionee stating that the Optionee is exercising such Option and
(ii) the payment of the aggregate purchase price of all shares as to which
such Option is then exercised and the payment of any required federal
income tax withholding. Such aggregate purchase price shall be paid to the
Company in cash, Stock or any other class of equity securities of the
Company (such Stock and other class of equity securities of the company are
hereinafter collectively referred to as the "Company Stock"), or in a
combination of cash or Company Stock at the time of exercise.
There may not, however, be any payment by an Optionee of the exercise price
in whole or in part with shares of Company Stock at a time when the Company
is Insolvent (as hereafter defined) or when such payment would make the
Company Insolvent, or as such payment may otherwise be prohibited by any
applicable state or Federal statute, rule or regulation, or any rule or
regulation of any stock exchange upon which Company Stock is traded, or if
Company Stock is traded on a recognized stock quotation service, which may
be the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), any rule or regulation of NASDAQ. For the purposes of
this Plan, "Insolvent' shall mean the inability of the company to pay its
debts as they become due in the usual course of its business. Company Stock
utilized in full or partial payment of the exercise price shall be valued
at the Market Price (as defined in paragraph 5 herein) on the date of
exercise of the Option.
Notwithstanding anything to the contrary contained herein, no written
notice shall be effective under this Section 9 unless it requests the
exercise of Options for one hundred (100) shares or an integral multiple
thereof; except to the extent necessary to make full exercise of the
Options in the event that only an odd lot remains. Upon the exercise of an
Option in compliance with the provisions of the Section, and upon the
receipt by the Company of the payment for the Stock so taken up, the
Company shall (i) deliver or cause to be delivered to the Optionee so
exercising his Option a certificate or certificates for the number of
shares of Stock with respect to which the Option is so exercised and
payment is so made, and (ii) register or cause such shares to be registered
in the name of the exercising Optionee in the corporate books and records.
10. Controlling Terms
Options granted pursuant hereto may include conditions that are more (but
not less) restrictive to the Optionee than the conditions contained herein
and, in such event, the more restrictive conditions shall apply.
11. Requirements of Law
If any law, regulation or order of the United States Securities and
Exchange Commission, or of any other commission or agency having
jurisdiction, shall require the Company or the exercising Optionee to take
any action with respect to the shares of Stock acquired by the exercise of
an Option, then the date upon which the Company shall deliver or cause to
be delivered the certificate or certificates for the shares of Stock shall
be postponed until full compliance has been made with all such requirements
of law or regulation. Further, in the event that the Company shall
determine that, in compliance with the Securities Act or any other
applicable statute or regulation, it is necessary to register any of the
shares of Stock with respect to which an exercise of an Option has been
made, or to qualify any such shares for exemption from any of the
requirements of the Securities Act or such other applicable statute or
regulation, it will do so at the Company's expense. Not until such an
action has been completed shall the Option shares be delivered to the
exercising Optionee. Further, in the event that at the time of exercise of
the Option the shares of Stock shall be listed on any stock exchange, then
if required by law or the exchange to do so, the Company shall register the
Option shares of Stock with respect to which exercise is so made in
accordance with the provisions of the Securities Act, any other applicable
law or regulation or any rules or regulations of any such exchange, and the
Company shall make prompt application for the listing of Option shares on
such exchange at the expense of the Company.
12. No Rights Conferred upon Granting of Options
The Optionee shall not have any rights as a shareholder of the Company with
respect to any shares of Stock prior to the date of issuance to the
Optionee of the certificate or certificates for such shares. Neither the
Plan nor the Option confer on the Optionee any right to be employed by the
Company.
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13. Adjustments
In the event of any reorganization, merger, consolidation, acquisition,
separation, recapitalization, split-up, combination, exchange of shares or
stock dividend of the Stock or shares convertible into the Stock or similar
corporate action, the number and class of shares of Stock available
pursuant to this Plan and any Options granted pursuant to this Plan,
together with the Option Prices, shall be adjusted by appropriate
modifications in this Plan and in any Options outstanding pursuant to this
Plan. Any such adjustment to the Plan or to Options or Option Prices shall
be made by notice of the Company's Board of Directors, whose determination
shall be conclusive.
14. Amendment or Discontinuance of the Plan
The Company's Board of Directors may at any time suspend or discontinue the
Plan, but no amendment shall be authorized without shareholder approval
which (i) materially increases the benefits accruing to participants under
the Plan; (ii) materially increases the number of securities which may be
issued under the Plan, except as otherwise provided in Section 13; or (iii)
materially modifies the requirements as to eligibility for participation in
the Plan.
In addition, notwithstanding any other provision in the Plan, in the event
of a change in federal or state law or regulation which would make the
exercise of all or part of an existing Option unlawful or subject the
Company to a penalty, the Company's Board of Directors may restrict such
exercise without the consent of the Optionee or other holder thereof in
order to comply with such law or regulation or to avoid such penalty.
15. Liquidation of the Company
In the event of the complete liquidation or dissolution of the Company,
other than as an incident to a merger, reorganization or other adjustment
referred to in Section 13 above, any Options granted pursuant to this Plan
and remaining unexercised shall be deemed canceled without regard to or
without being limited by any other provisions of this Plan.
16. Unsecured Obligation
Optionees shall not have any interest in any fund or special asset of the
Company by reason of the Plan. No trust fund shall be created in connection
with the Plan or any award thereunder, and there shall be no required
funding of amounts which may become payable to any Optionee.
17. Governing Law
The Plan shall be governed by, construed and enforced in accordance with
the laws of the State of Delaware.
18. Compliance with Rule 16b-3
It is the intent of the Company that all Options granted hereunder comply
with the applicable provisions of Rule 16b-3, as amended, promulgated
pursuant to the Securities Exchange Act of 1934, as amended. As a result,
this Plan may be amended by the Company's Board of Directors in any manner
necessary or desirable to meet any provision or condition of Rule 16b-3. In
addition, all Options shall be granted in such a manner as to comply with
the applicable requirements of Rule 16b-3.
19. Approval
This Amended and Restated Plan shall take effect upon approval by the
holders of a majority of the Company's Common Stock present or represented
and entitled to vote at a meeting of stockholders, which approval must
occur within twelve (12) months after the date the Amended and Restated
Plan is adopted by the Board of Directors.
17
